Projects can use fixed duration or fixed work scheduling methods. The method is selected when you create or edit a project. See Creating new projects.
Fixed duration
The fixed duration method is most commonly used and recommended for development projects. Tasks are time boxed, meaning the duration of tasks is constant in the schedule independent of the number of users allocated to them. A task is either complete (yes) or not complete (no).
Fixed work
The fixed work method is primarily used for more traditional waterfall and task scheduling practices where a time budget is used for the project, its sub projects, and tasks. Instead of a constant duration of tasks in the schedule, the duration of each task is automatically calculated by the budgeted hours and users allocated to the task. A Budgeted work column is added to the project and displayed in the item list. A percentage value measures the degree of completion of a task. The Earned Value column automatically calculates how many working hours are added to the task based on the percentage of completion of the task and budgeted work.
For example, you have 32 hours budgeted for a task (with a standard 8 hour working day). If one user is added to the task, it would take 4 working days to complete. If two users are added to the task, it would only take 2 working days to complete. If only one user working at a capacity of 50% is added to the task, it would take 8 working days to complete.